RMG Russian Venture Capital Market Overview 2Q2013

Russian Venture Capital
Market Overview
2Q2013

Contents
2
Introduction 3
About Rye, Man & Gor Securities 4
Russia’s venture capital market: the 2-minute tour 5
VC market overview 6
Deal focus 10
Methodology 12
Cloud solutions 13
Cloud CRM/ERP/SCM 18
Megaplan 24
MoySklad 26
amoCRM 28
Moe Delo 29
Miiix 30
BigBird 32
Conclusion 34
Acknowledgements 35
Contact information 36

Dear friends,
We are pleased to present the first issue of the Russian Venture Capital Market Overview by Rye, Man &
Gor Securities. This first Report includes a rundown of Russia’s venture capital market for 2Q2013 and an
industry focus, in which we provide a detailed overview of the cloud technology market.
The primary goal of our project is to make Russia’s innovative sector more alluring for both foreign and
domestic investors and increase the efficiency of contacts between investors and innovative companies
seeking financing.
In our opinion, the main barrier to growth of Russia’s venture capital market is the lack of objective
information. Foreign and domestic investors do not have sufficient reliable data and analytical materials on
innovative markets and projects in Russia. This slows down the search for investment targets, makes
investment decisions more difficult, increases costs for project analysis and due diligence, and restricts the
size of the pool of potential venture investors.
We hope that our analytics will help bridge some information gaps in Russia’s venture capital market, make
it more transparent, and give investors a better idea of innovative markets and projects.

About Rye, Man & Gor Securities
Rye, Man and Gor Securities (RMG) is an independent Russian investment company. RMG has
been on the market for 20 years, in which time it has earned an excellent reputation among both
clients and peers as a reliable partner.
RMG provides a wide range of services to Russian and foreign clients in the venture capital
market, including:
• search for promising target assets;
• capital raising through public or private offerings;
• search for strategic investors and M&A deal support;
• venture project support, including strategy development and measures to increase capital-
raising potential;
• advisory on deal structuring and financing, deal processing, negotiations, and target
company due diligence.
Rye, Man and Gor Securities is a member of M&A Worldwide, a cross-border M&A boutique
network, and of the National Alternative Investment Management Association.
4

$87M Privatefunds
$44.9m
Public funds
$15.3m
eCommerce
$31.4m
Biotech
$6.3m
Other IT
$36.8m
Industrial tech
$5.2m
Mobile apps
$3.8m
Cloud tech
$3.8m
$1.9m
$1.6m
2012
2Q2013
Average deal value
Seed
29
Startup
16
Growth
5
Expansion
3
$149m
$87m
1Q2013 2Q2013
Capital invested
-44.1%
Russia’s venture capital
market: the 2-minute tour
PPP
$13.9m
Business angels
$11.5m
Corporatefunds
$1.6m
53
75
53
1Q2013 2Q2013
Deals closed
-29.3%
2Q2013
* Excluding deals over $100m (see Methodology)
*
ImagebyIconBeast-http://www.iconbeast.com/

* Including deals with undisclosed values
VC market: overview
98
167
336
135 149
87
100
89
87
100
75
53
0
20
40
60
80
100
120
0
100
200
300
400
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013
Russian venture capital deal flow
Capital invested, $
million
Deals closed
According to our estimates, venture capital invested
in Russia in 2Q2013 totaled $87m, down by 41.3%
q-o-q and by 47.7% y-o-y. The number of deals
closed fell to 53.* Both total capital invested and
deals closed were at 6-quarter lows.
Russia’s negative trend in venture capital invested
and deal numbers matches global slowing of
economic growth in 1H2013, and a slight
contraction of VC markets was also registered in
Europe and the US. But a number of other specific
factors played a role in the Russian VC downturn.
Most importantly, transparency is not a
characteristic feature of the Russian VC market,
so that closed deals are often announced only after
several months. Also, the parties often prefer not to
disclose details, and expert estimates may vary
substantially. For these reasons, the actual
decrease in VC investments in 2Q2013 may not be
as substantial as our estimate suggests.
It should be noted that, for the purposes of this
report, total capital invested does not include
deals over $100m, exit deals (see table) and
investments in venture infrastructure (e.g. funds or
accelerators).
6
VC investments are stagnating
Sources: Rusbase, Venture Database, RMG
Company Investor Deal
value
Sector
Exits
B2B-Center Elbrus Capital $52m eCommerce
Zephyr Solutions Cloud4Auto n/a IT
Large deals
Lamoda Access Industries,
Summit Partners,
Tengelmann
$130m eCommerce
Large deals and exits, 2Q2013

The q-o-q decrease in the number of deals closed in
2Q2013 was mainly due to a sharp decline in
venture financing for seed stage companies. There
was only a slight drop in the number of non-seed
companies financed (from 30 in 1Q to 24 in 2Q),
whereas only 29 companies currently at the seed
stage closed VC rounds, compared to 45 in 1Q.
Interestingly, the seed slump did not affect the
amount of capital invested in seed companies.
On the contrary, total investments into seed
companies grew by 9.3% q-o-q to $17.2m.
It is worth noticing that seed companies have
received less capital from private and joint funds in
2013 than in 2012. Private funds only invested
13.1% of all venture capital in 2Q2013, whereas
their contribution averaged 34% in 2012 and
reached 44.7% in 4Q2012. A similar trend is evident
in startup investments, which implies that young
companies are having to rely on state-backed
institutions for early-stage financing.
Numbers of growth-and-expansion VC deals are
much lower than seed and start-up (just 8 in
1Q2013 and as many in 2Q), suggesting that
Russian venture projects find it much harder to
finance further growth and expansion on VC
markets. However, although there were only a few
growth and expansion deals, they accounted for
53% of all venture capital invested in 2Q2013.
0
10
20
30
40
2Q2012 3Q2012 4Q2012 1Q2013 2Q2013
Private funds cut seed investments
in 2013
Business angels Corporate funds Public funds
Private funds PPP
Investments at seed stage by investor type, $ million
Number of deals at the seed stage fell sharply
VC market: stages
73
10 3 3
51
26
7
3
69
27
3 1
45
22 7
1
29
16 5 3
0
20
40
60
80
Seed Startup Growth Expansion
VC deal flow by stage
2Q2012 3Q2012 4Q2012 1Q2013 2Q2013
7

VC market: sectors
IT remains the most fertile soil for venture projects.
In 2Q2013, some 87% of all venture capital in
Russia was invested in IT firms (eCommerce,
Cloud, Mobile apps and others). Total investments
in industrial tech and biotech over the last 5 quarters
have been just 11% of total venture capital invested.
It is interesting to note a certain degree of sector
specialization: while IT venture projects are
mostly financed by private and corporate funds,
up to 90% of investments in industrial tech and
biotech firms come from state-funded institutions.
Dmitry Galperin, Investment Director at Runa
Capital, a Russian VC firm, told us that industrial
tech and biotech sectors are riskier than IT since
they need more investments and time to market.
Also, promising projects are more numerous in IT
than in biotech or industrial tech due to software
development expertise in Russia, and enthusiasm
for IT is supported by success stories from the US
and Europe.
eCommerce is the most popular IT subsector, with a
41.8% share of total venture capital invested over
the last 4 quarters. As much as 81.2% of all venture
capital invested went to eCommerce companies in
2Q2012 thanks to two large deals: Avito.ru, an
online classifieds site ($75m), and KupiVIP, a
shopping club ($38m). For comparison, the biggest
deal closed in the eCommerce subsector in 2Q2013
was only worth $10m: Media Capital, a VC firm
created in 2012, purchased a minority stake in a
domestic appliances e-store, Holodilnik.ru.
The share of venture capital invested in cloud
tech companies went sharply up to 4.3% in 2Q
from just 0.8% in 1Q, but investment in mobile apps
plunged from $41.3m (27.8% of total VC invested)
in 1Q to $3.8m (4.4%) in 2Q.
The average VC deal value was $1.65m in 2Q2013,
which is slightly less than in 1Q ($1.98m) and in
2012 ($1.96m).
1,9
3,9
1,4
2,0 1,6
0
1
2
3
4
5
2Q2012 3Q2012 4Q2012 1Q2013 2Q2013
Average VC deal values, $ million
8
2Q2013
1Q2013
4Q2012
3Q2012
2Q2012
0% 20% 40% 60% 80% 100%
Sector shares in VC investment
eCommerce
Cloud tech
Mobile apps
Other IT
Biotech
Industrial tech
IT still reigns supreme

VC market: investors
0 10 20 30 40 50
PPP
Private funds
Public funds
Corporate funds
Business angels
Venture capital invested in 2Q2013 by sector and investor type,
$ million
eCommerce
Cloud tech
Mobile apps
Other IT
Biotech
Industrial tech
9
Private funds are the most generous investors
0
10
20
30
40
50
Business
angels
Corporate
funds
Public funds Private funds PPP
Seed stage financing:
state-backed VC funds are the only option
Seed Startup Growth Expansion
* According to PwC/NVCA MoneyTree™ Report based on Thomson Reuters data
Another distinctive feature of Russia’s venture capital market is
the extremely small role of corporate VC funds. They were
responsible for just 1.8% of total capital invested in 2Q2013, up
slightly from 1.5% in 2012. By contrast, corporate VC funds
contributed from 6.8% to 9.1% of all venture capital invested in
the US in each of the last 10 years.*
In 2Q2013, private VC firms invested
$44.9m (51.5% of total VC) in 16
projects, which makes them the most
active investors in the Russian market.
So private funds have retained
leadership, although both the amount
they invested and number of deals they
closed almost halved q-o-q: in 1Q,
private VC firms invested $88.5 in 32
projects.
Interestingly, investors in the
Russian VC market seem to be
sector-specialized. In 2Q2013, only
private VC firms and business angels
invested in eCommerce, while biotech
companies received all their financing
from public VC institutions. This may
reflect the fact that private VC firms are
generally less involved in early-stage
deals (most venture projects in biotech
and industrial tech are still at seed
stages). Also, unlike biotech and
industrial tech, IT offers private funds
attractive “copycat” projects based on
ideas already successfully
implemented in Europe or the US.
Venture capital invested in 2Q2013, $ million

Deal focus
Company Description Sector Investor Deal
date
Deal
value
Stage Comments
B2B-Center Largest e-auction
marketplace in
Russia
eCommerce Elbrus Capital
Fund II
04/13 $52m. Expansion Elbrus Capital purchased
23% of company equity: one
part from Mail.ru Group
(15%), which completely
exited, and the remainder
from co-founder Alexander
Boyko (8%).
Game Insight Mobile games
developer
Mobile apps IMI.VC 02/13 $25m Growth The company had already
received financing from
IMI.VC in 2011 and 2012. A
large deal became possible
thanks to a $75m investment
in the fund by Mikhail Vinchel.
Ostrovok Online hotel
booking site
eCommerce Yuri Milner and
co-investors
03/13 $25m Expansion Another round of financing
may have been triggered in
response to rival Oktogo.ru
raising funds two weeks
before (see below). Ostrovok
cut staff by a third shortly
after the round in order to
focus on core projects.
Oktogo Online hotel
booking site
eCommerce Victor Sazhin
Group and co-
investors
03/13 $11m Growth The financing was raised to
strengthen the brand and
expand in Russian regions.
The company expects to
close another round of
financing in 2013.
WebMediaGroup A holding
company owning
Dostavka.ru,
Zoomby.ru,
Menu.ru, Bank.ru
etc.
Other IT Gazprombank,
Leader-
innovations,
Sergey
Kalugin
05/13 $10m Growth The company received $6m
from Gazprombank and
Leader-innovations in 2011.
A major chunk of the funds
raised will be spent on
expansion of Zoomby.ru, a
video hosting site.
Holodilnik.ru Home appliances
online store
eCommerce Media Capital 04/13 $10m Expansion First media-for-equity deal in
Russia: Media Capital will
conduct a major advertising
campaign for the e-store in
exchange for a minority
stake.
uBank Mobile payments
service
Mobile apps Runa Capital 02/13 $8m Startup Runa Capital’s largest deal.
uBank needed funds to
finance the development of
new mobile payments
technology and the launch of
a new product.
10

Deal focus
Company Description Sector Investor Deal
date
Deal
value
Stage Comments
Esky Children’s
products e-store
eCommerce ru-Net II 03/13 $6m Growth The deal was based on a
valuation of $24m. The ru-
Net II fund fully owns Ivi.ru, a
video hosting service, and
holds stakes at IConText, an
online advertising agency,
Ozon.ru, an online store, and
Biglion, a discount service.
Travelata Travel booking
service
eCommerce Invia, MCI
Management
06/13 $5m Growth Poland-based MCI
Management invested
$500,000 in Travelata in
2012..
Integrator Interactive ad
management and
media planning
tool
Other
IT/Advertising
Bulvarnyoe
Koltso
02/13 $5m Startup Bulvarnoye Koltso has
exclusive advertising rights
on Moscow public transport.
Tartis-Aging Anti-aging
technology
development
Biotech Skolkovo
foundation
02/13 $5m Startup The company is included in
the portfolio of Bioprocess
Capital Ventures, a VC fund
of the state-backed Russian
Venture Company. The grant
will be used to start clinical
tests of the anti-aging
product.
Garpun Contextual and
targeted ad
management
system
Other
IT/Advertising
iTech Capital 04/13 $3,5m Startup Tech Capital fund has
already invested in a similar
project designed for smaller
clients. Garpun is an
investment aimed at the mid-
market sector.
YaKlass School education
portal
Other
IT/Education
Data Pro
Group, Nikita
Khalyavin,
Vesna
Investment
05/13 $2m Startup Nikita Khalyavin is the
founder of Professionali.ru
and Shopogoliq.ru. YaKlass
is planning to launch its
educational services on
English- and Spanish-
speaking markets.
11

Methodology
This report is based on data provided by Rusbase,
Venture Database, Russian Venture Company and
Skolkovo Foundation, processed and aggregated by
RMG.
Only venture capital investments and grants by
business angels, corporations, corporate VC funds,
private VC firms and public VC institutions not
exceeding $100m in one round were included in the
venture capital market analysis.
For the purposes of this report, the term “venture
capital investments” stands for equity investments in
new or growing companies which operate in the IT,
industrial technology or bio technology fields. We
only included companies with main business in
Russia in the total venture capital market volume.
We did not include financing received from Russia-
based investors by companies oriented to foreign
markets.
We also included grant financing in the total VC
market size. Although grants are essentially a non-
repayable subsidy for research and development,
they were included in the total capital invested since
they are allocated on a competitive basis.
Exits and investments in market infrastructure were
not included in the total VC market size. The term
“investments in market infrastructure” stands for
investments in VC funds, business accelerators,
tech parks and other institutions which operate on
the VC market but are not venture projects. The
term “exit” refers to a VC deal in which one or more
investors exit a company’s equity.
We distinguish between 4 stages of venture project
life:
1. Seed: a project only exists on paper or as an
idea.
2. Startup: a company that is being set up or has
had operations for a short period of time without
any commercial sales.
3. Growth: a new product has been launched and
first commercial revenues have been
registered.
4. Expansion: revenues, market share, output,
office area, etc. are growing
This report distinguishes between three venture
project sectors: IT, industrial tech and biotech.
The information technology (IT) sector consists of
the following subsectors: eCommerce (including
travel booking sites), cloud technologies, mobile
apps, and other IT (IT companies not otherwise
specified, including telecoms, advertising
technologies, media projects, Internet media,
search and recommendation sites, etc.).
The industrial technology sector includes
companies designing equipment and technologies
for industrial use, including energy efficient and
clean equipment and technologies.
The biotech sector includes companies designing
medical equipment, medicines, and innovative
medical services and technologies.
We do not further divide biotech and industrial tech
into subsectors due to the low volume of VC
investments in these sectors in Russia.
12

Cloud solutions
13
2 Cloud technology enables businesses to access inexpensive scalable IT resources without
incurring infrastructure costs
3
Russia’s cloud tech market is dominated by Infrastructure-as-a-Service (IaaS) solutions. But
this segment is characterized by high entry barriers that make it unsuitable for venture projects
4
The Software-as-a-Service (SaaS) segment has a slightly smaller share of the cloud market
than IaaS, but SaaS it is a much more suitable segment for venture projects
5
SaaS competes successfully with traditional software in providing solutions for businesses, and
the cloud tech penetration rate is highest in the CRM sub-segment
6
Most Russian venture SaaS projects target SMEs that have never used automation systems
before, so they are competing with Microsoft Excel rather than out-of-a-box software
7
There are numerous SaaS products in the Russian market, but solutions that integrate various
cloud systems within a single framework (cloud brokers) are only just arriving and represent
the most promising market niche
1 Cloud is the future of IT. The global cloud tech market is growing much faster than the IT
market as a whole
In this chapter, we present a review of Russia’s
cloud technology venture market. We believe that
cloud is the most promising area within IT and
recommend investors to take a closer look at it.
American and European cloud providers have
already shown the potential of this sector, and their
Russian peers should also fare well, since Russian
IT specialists have strong software development
expertise that makes their products competitive both
domestically and globally.
It should be noted that this review only deals with
venture projects in the cloud technology sector and
does not claim to offer a comprehensive overview of
the Russian cloud market.
Review of the cloud technology venture market

Cloud solutions: market
In 2013, experts have no doubt that cloud
technologies will set the pace for the whole of
the global IT sector in the near future. The cloud
tech market is growing faster than other IT:
according to Gartner, the public cloud market will
grow by 18.5% y-o-y this year, whereas IT as a
whole will see 4.1% growth. The significance of
cloud computing is comparable to the arrival of the
first PCs some 30 years ago, since it offers both
large enterprises and SMEs access to practically
unlimited and easily scalable IT resources.
14
Scalable
• Users can rapidly change
the amount of available
resources without any
penalties or limitations
Multi-tenant
• Numerous users can access
the service simultaneously
while retaining security and
privacy
Pay-as-you-go
• Payment depends on actual
use
Abstract
• Users do not and need not
know about the actual
location of data and
infrastructure
Cloud
solutions
110 131 155 181 210
0
100
200
300
2012 2013 2014 2015 2016
Global cloud tech market size, $ billion
Gartner forecasts that the global cloud tech market
will grow by an average of 17.5% a year in 2013-
2016 and reach $210b. But Gartner includes all
internet advertising in the cloud technologies
market. Other consultancies, which leave out
internet advertising, offer much lower forecasts.
Forrester expects the cloud tech market to expand
from $40b in 2012 to $100b in 2016, while IDC
estimates are $41b and $114b, respectively.
Orange Business Services estimate Russia’s cloud
market size at R4.5b ($145m) in 2012 and expect it
to expand at 44.1% CAGR to R19b ($612m at the
2012 average exchange rate) by 2016.
Advantages of cloud solutions
New opportunities for business
Cloud technologies help businesses reduce
costs and give them access to IT solutions
which were previously the exclusive preserve of
large corporations. Parallels estimated the cloud
services market for Russian SMEs at $466m in
2012, including spending on hosting and internet
advertising. The report by Parallels points out that
the market will be driven by growth of broadband
access in Russian regions and growing cloud
awareness among Russian SMEs: 47% of SMEs
which currently do not use cloud solutions say that
they will start using them within 3 years.
Source: Gartner

Cloud solutions: categories
15
The cloud tech market is usually divided into three
major segments: infrastructure-as-a-service
(IaaS), platform-as-a-service (PaaS) and
software-as-a-service (SaaS). Cloud services can
be divided between the three depending on the
extent to which they are under the control of the
user (see the figure below).
According to IDC, IaaS dominated the Russian
public cloud market in 2011 with a share of 49.6%,
closely followed by SaaS (46.8%). PaaS trailed
behind with a mere 3.6%, but Orange Business
Services expect PaaS in Russia to grow fastest of
the three: by 70.1% per year in the next 4 years.
IaaS, PaaS, SaaS: from control to convenience
SaaS
Applications
PaaS
Operating system
Development
environment
Applications
deployment
IaaS
Servers
Data storage
Network components
Provider-managedUser-managed
IaaS makes it
unnecessary for the
user to install, support
and update their own
infrastructure
PaaS providers offer a
cloud environment for
the development of
applications
SaaS solutions are
applications located on
the provider’s
infrastructure and need
not be installed on the
user’s machines
Specific features of each category make them more
or less attractive for venture capital. IaaS is by and
large a market for heavyweights since it requires
substantial investments in the installation and
support of infrastructure. The global IaaS market is
dominated by giants such as Amazon Web
Services, Terremark (a subsidiary of Verizon), IBM,
and AT&T. In Russia the category is still emerging
and remains immature, but it is dominated by
relatively large players such as CROC, I-Teco, and
Parking.ru. Orange Business Services estimate
Russia’s IaaS market at R3.4b ($110m) in 2013 and
forecast it to grow at a CAGR of 42.3% to R9.8b
($317m) in 2016.
Global demand for PaaS solutions is only just taking
off, but PaaS offer major advantages to
developers. According to Parallels, global PaaS
sales in 2013 will reach $1.5b, doubling by 2015.
PaaS is the youngest and least mature category of
cloud technologies, occupying only a marginal
share of both Russian and global cloud markets.
Specialized niche solutions by small providers
compete against PaaS products offered by
behemoths like Google, Microsoft and
Salesforce.com. Mikhail Oreshin, co-founder of the
Russian Cloud Computing Professional
Association, told us that the Russian PaaS market
is too shallow for small players, so that global
market orientation is the only promising option for
Russian PaaS projects.

Estimates of Russia’s IaaS market size vary widely,
with Orange Business Services forecasting annual
growth by 42.3% from $81m in 2012, and a 2012
report by J’son & Partners predicting an 11.3%
growth rate from $32m in 2012. Both estimates
suggest a very modest role for Russia in global
terms, since, according to Gartner, the global IaaS
market will grow from $6b to $24b in 2012-2016.
J’son & Partners attribute 76% of Russian IaaS
sales in 2011 to the three largest players: CROC, I-
Teco and Parking.ru. Microsoft also entered the
Russian market in 2013. Since the entry barrier is
much higher in IaaS than in PaaS or SaaS, there
are only a few IaaS venture projects.
IaaS & PaaS
81
110
158
226
317
32 52 71 84 90
0
100
200
300
400
2012 2013 2014 2015 2016
Estimates of Russia’s IaaS market size,
2012-2016, $ million
Orange
Business
Services
J'son &
Partners
16
Sources: Orange Business Services, J’son & Partners,
RMG estimates
43%
23%
10%
3%
3%
18%
IaaS market shares in Russia, 2011
CROC
I-Teco
Parking.ru
Clodo
Oversun
Others
PaaS is an emerging and, according to experts, the
most promising cloud tech category. The main
target audience for PaaS products are web
developers. Globally, the most successful model
combines PaaS solutions with corresponding IaaS
and SaaS products. This model is used by Amazon
Web Services, the leader of the PaaS market. The
two main PaaS contenders globally are Microsoft
and Salesforce.com. Technavio recently published
an analytical report estimating the 2012 global PaaS
market at $1.3b and forecasting its growth by 49% a
year to $6.45b by 2016.
Russia’s PaaS market is very narrow at present, but
Orange Business Services expect it to grow by 70%
a year in the next 4-5 years.
At present, there are only a handful of successful
PaaS solutions “made in Russia”. The most notable
is Jelastic, a platform for Java and PHP
development, which won the Technology Leader
Awards from Oracle in 2012. The platform competes
against solutions backed by Microsoft and VMware,
citing no vendor lock-in and global reach as its
advantages.
IaaS: no place for small players
PaaS: ready, steady, grow
Source: J’son & Partners

The software-as-a-service (SaaS) market is the
most mature of all cloud tech markets globally.
According to Gartner, SaaS sales were $16b in
2012 (more than PaaS or IaaS) and will grow at
CAGR of 19.5%. These figures only include public
cloud solutions for enterprises.
Unlike IaaS and PaaS, the SaaS model is
characterized by a great diversity of products,
with solutions available for automation of practically
any business process, from project collaboration to
enterprise resource planning. As mentioned above,
automation only became an option for most small
and medium enterprises recently, with the advent of
cloud technologies, so there is plenty of space in
the market for new cloud solutions. This view is
confirmed by Gartner, which found that cloud tech
penetration in business process automation is still
only 20%.
SaaS
16
20
24
28
33
0
10
20
30
40
2012 2013 2014 2015 2016
Global SaaS market size, $ billion
17
Source: Gartner
SaaS: rich potential
45
68
103
158
232
0
50
100
150
200
250
2012 2013 2014 2015 2016
SaaS market in Russia, $ million
Source: Orange Business Services
The SaaS market has only just taken shape in
Russia and Orange Business Services expect it to
grow at an average of 50% annually for the next
3-4 years. While SaaS dominates the global cloud
tech market, in Russia it trails behind IaaS.
Analysts do not expect this situation to change
any time soon: Russian SMEs are only testing
SaaS waters, so their cloud tech awareness and
trust levels are far short of global trends. But
experts point out that this is changing.
We have chosen SaaS-based CRM/ERP/SCM
solutions for detailed analysis. We see plenty
of promising venture projects in this field that
promise to become new niche leaders on the
growing Russian market. Our approach is
supported by Gartner figures, which show that
cloud tech makes particularly rapid progress in
the CRM/ERP/SCM segment worldwide.

Cloud CRM/ERP/SCM: market
18
Global market: traditional business solutions under a cloud
According to Gartner, SaaS solutions accounted for
35% of all Customer Relations Management (CRM)
services in 2011, whereas 48% of CRM applications
will be cloud-based by 2016. Gartner forecasts the
SaaS penetration rate in the Supply Chain
Management (SCM) and Enterprise Resource
Planning (ERP) segments to reach 28% and 17%
by 2016, respectively. So cloud tech already
represents serious competition for traditional
business solutions and is bound to take more of
their market in the future.
Gartner estimates the global CRM/ERP/SCM
market at $56b in 2013 and expects it to reach
$84.5b by 2017. Based on these data, we estimate
the size of the global cloud CRM/ERP/SCM market
in 2012 at $11b, with CAGR of 21.7%.
0%
10%
20%
30%
40%
50%
60%
2011 2012 2013 2014 2015 2016
SaaS penetration rate
CRM
SCM
ERP
Source: Gartner
11,0
13,8
16,7
20,0
24,1
0
5
10
15
20
25
30
2012 2013 2014 2015 2016
Worldwide cloud CRM/ERP/SCM
market, 2012-2016, $ million
SCM
ERP
CRM
Sources: Gartner, RMG estimates
In a survey by Gartner in 2012, respondents cited
lower total costs of ownership, faster and
cheaper deployment, and lower capex among
the main reasons for using SaaS rather than
traditional non-cloud solutions. When asked why
they hold back from cloud, CRM/ERP/SCM
respondents cited uncertainty whether cloud would
address their needs, satisfaction with existing on-
premise applications, no further requirements, and
being locked into their current solution with
expensive contractual requirements.
Current trends and attitudes of business support the
expert view that cloud-based business
applications are likely to dominate the market.
We believe that this trend is more articulate in the
small and medium business sector than for large
enterprises.

Cloud CRM/ERP/SCM: market
19
Russian market: reaching for the clouds
Cloud solutions (particularly SaaS) are gaining
ground fast in Russia, but estimates of the current
state of play differ widely. In a recent study,
Parallels estimated the Russian cloud market for
SMEs at $174m, including CRM/ERP/SCM systems
as well as cloud file sharing, accounting,
collaboration, and phone and web conferencing
services (the share of CRM/ERP/SCM applications
in the forecast is not specified). According to
Parallels, the market will grow by CAGR of 29% to
$377m by 2015. However, Mikhail Smolyanov, CEO
at Megaplan, a leading Russian provider of SaaS-
based CRM and task management solutions,
believes that Russia’s cloud CRM/ERP/SCM
applications market is not worth more than $30m at
present, although his estimate only includes on-
demand (public) SaaS sales.
Description and assessment of the present state of
Russia’s cloud-based applications market is
particularly difficult because CRM, ERP and SCM
are still very young sciences for most Russian
SMEs, which often fail to distinguish between the
three and between the corresponding cloud
solutions.
In most cases SME needs, and therefore the
functionality of most SaaS solutions, cannot be
classified as pure CRM, ERP or SCM, primarily
because users themselves do not think within this
framework. We have therefore taken the liberty of
merging these three traditional segments into one
for the purposes of the present report.
An important point to remember for understanding
the Russian market is that, whereas large (and
some medium-sized) businesses were able to
introduce traditional business process automation
solutions before the arrival of cloud technologies,
automation has only become affordable for most
SMEs thanks to cloud-based products. This
distinctive feature has two important implications.
Firstly, market participants point out that needs of
companies for business process automation are
strongly prioritized: accounting is usually the first
function to be automated as it is compulsory for all
businesses to keep accounts and report to fiscal
authorities. So the economic gain of a cloud-based
solution in this sphere is felt as soon as it is
adopted.
174
225
291
377
0
100
200
300
400
2012 2013 2014 2015
SaaS-based business applications
market in Russia, $ million
Sources: Parallels, RMG estimates
– The current potential
market for cloud CRM
systems for SMEs is about
$120 million. But it is only
less than 10% saturated now
Vladimir Gabriel, Head of sales at Delovaya Sreda

Cloud CRM/ERP/SCM
20
The next steps towards automation are usually
made in the fields of CRM/ERP/SCM and
task/project management. But not all Russian
SMEs make these next steps. Mikhail Smolyanov
believes that SaaS penetration rates are low mainly
because Russian businesses are insufficiently
aware of the gains, which automation offers. A
survey by Parallels in 2012 found that only 5% of
SMEs surveyed were using a cloud-based CRM or
ERP solution, while a modest 11% of them were
planning to adopt a cloud solution for these tasks
within 3 years. Limited availability of broadband
connection in Russian regions may explain some of
this “technophobia”.
Secondly, due to market immaturity, cloud-based
CRM/ERP/SCM products compete against
Microsoft Excel and sometimes even pen-and-
paper ledgers rather than against each other.
SMEs are not well-aware of the availability and
advantages of cloud solutions for business, so any
marketing activity to promote a particular cloud-
based product promotes the idea of SaaS in
general, serving the interests of rival companies as
well as those of the advertiser.
Overall, despite the challenges, Russia’s cloud
CRM/ERP/SCM market has good prospects and
may grow at a CAGR of 50-70% in the next 4-5
years. Experts point out that awareness of cloud-
based business applications, however low, is on a
strong uptrend, both among SMEs and large
companies. At present, large and most medium-
sized enterprises tend to use SaaS-based
CRM/ERP/SCM solutions within the confines of
small company departments and sub-sections, but
SaaS providers have noted a positive shift in attitude
towards cloud tech.
We see the greatest potential in integration of
various cloud-based SaaS automation products
and also in the development of industry-specific
“niche” CRM/ERP solutions.
– We used to have to explain
what a cloud was, where data
were stored and how they
were protected. Now clients
are better prepared: we have
been receiving explicit
requests for SaaS solutions
Alexey Fitiskin, Head of sales at ASoft
– The concept of a cloud
broker, which has existed in
the West for some time now,
is still virtually inexistent in
Russia. This is where I see a
point of growth
Mikhail Oreshin, co-founder of Russian Cloud Computing
Professional Association
Accounting
CRM/ERP/SCM
Task/project
management
Business process automation priorities

The company held an IPO on the NYSE in 2004,
selling 10% of its equity for $110m. In September
2008, Salesforce stocks were included in the S&P
500 index. The company’s market cap grew by
1650% from January 31, 2005 to January 31, 2013.
Net losses in 2012-2013 after years of profits were
not due to a negative business trend, but reflect
income tax provisions of $142.7m, growth of
goodwill amortization by $88m and non-cash costs
of $379.4m in an option programme.
Salesforce has generated consistently positive cash
flows. In FY2013, the company registered free cash
flow of $557m.
The company’s average 2004-2013 P/E is 205 and
average EV/Sales for the same period is 7.76.
1,4
4,5 5,0 6,2
3,3
8,1
17,2 16,0
25,2
2005
2006
2007
2008
2009
2010
2011
2012
2013
Salesforce Inc. market cap*, $ billion
Success stories in the cloud
Total revenue of leading Russian cloud providers do
not exceed a few million dollars at present, and
Megaplan, one of the market leaders, was valued at
a mere $15m in a recent 1C deal. But Russian cloud
providers have much to aspire to: their global
counterparts now boast billion-dollar market caps,
although their revenues 10-12 years ago were those
of Russian cloud providers today.
In order to appreciate the potential, it is worth briefly
retelling the stories of Salesforce and Net Suite, two
of the world’s most successful cloud CRM/ERP
developers.
Salesforce Inc., the world’s leading cloud CRM
provider, was founded in 1999. Growth of its
revenues and customer base have been rocket-
propelled. Company revenue increased by 600
times in 2001-2013, with revenue CAGR amounting
to 51%.
The number of clients rose from 1500 as of January
31, 2001, to 104,000 by the end of July, 2011.
According to Gartner, Salesforce had a 14% share
of the world’s CRM market in 2012 (35% of the
cloud CRM market).
Source: Bloomberg
0
1000
2000
3000
4000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Revenue of Salesforce Inc., $ million
-400
-200
0
200
400
600
2006 2007 2008 2009 2010 2011 2012 2013
Salesforce Inc. free cash flow and net
income, $ million
Free Cash Flow Net Income
Sources: Company data, Bloomberg
*Market cap figures are given for the financial year ending on
January 31.
Source: Bloomberg

Net Suite Inc., founded in 1998, is one of the
world’s leading developers of cloud solutions for
business automation. The company is the world
leader by numbers of cloud ERP customers (more
than 16,000).
The company showed revenue CAGR of 59% in
2002-2012 from $3.1m in 2002 to $308.8m in
2012.
Net Suite held an IPO on the NYSE in 2007.
Although the stock suffered during the 2008 crisis,
its market cap grew by 108% from December 31,
2007, to December 31, 2012. Net Suite’s market
cap rose by a further 40.5% in 1H2013 to reach
$6.87b.
* At year-end.
A loss of $51m in 1H2013 was mainly due to
$35.5m non-cash expenses in an option
programme. The company started generating
positive cash flows in 2010, showing FCF of $60m
in 1H2013.
Average 2007-2012 EV/Sales equals 10.4**.
The success of Salesforce and Net Suite reflects
high growth rates of the cloud tech market in the
US. Russia looks set to emulate these growth rates
soon, so investors who make the right choice today
can expect substantial gains. We think that at least
some of the Russian cloud projects presented
below will be winners.
**Calculated from EV and Sales as of December 31 of each
year.
2,4
0,5
1,0
1,6
2,8
4,9
2007 2008 2009 2010 2011 2012
Net Suite Inc. market cap*, $ billion
Source: Bloomberg
0
100
200
300
400
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Net Suite Inc. revenue, $ million
-60
-40
-20
0
20
40
60
80
2006
2007
2008
2009
2010
2011
2012
6м2013
Net Suite Inc. free cash flow and net
income, $ million
Net Income Free Cash Flow
Source: Bloomberg
Source: Bloomberg
Success stories in the cloud

Cloud CRM/ERP/SCM: solutions
In this chapter, we will take a closer a look at cloud
CRM/ERP/SCM providers operating on the Russian
market. We contacted a large number of
companies, not all of which agreed to share detailed
information about their products and business. But,
we are confident that the data, which we have
collected will prove of use to both venture capitalists
and cloud entrepreneurs.
The Russian cloud market
Small but promising
According to expert estimates, Russia’s cloud
CRM/ERP/SCM market size was between $10m
and $30m in 2012. Market growth rates are
expected to be 50-100% a year over the next 3
years.
Little competition and high concentration
According to market players, the Russian cloud
CRM/ERP/SCM segment is characterized by a very
low level of competition as most new customers
previously used Excel or pen-and-paper book-
keeping rather than rival software.
Megaplan appears to be the overall market leader
with revenues of $5m, or 25% of the market.
MoySklad is the leader in the sales and inventory
management segment, with revenues of $2m in
2012, while amoCRM is the largest player in cloud
CRM for SMEs.
Foreign players are also present on the Russian
market. According to market participants, the most
popular non-Russian solutions include those of
Salesforce, Zoho and SugarCRM. However, experts
were unable to estimate their sales in Russia, only
specifying that their market share is very small.
Foreign cloud solutions are generally more
expensive than Russian ones and often require
lengthy and/or costly deployment procedures.
Low customer loyalty
Levels of customer loyalty to Russian cloud
providers are very low at present. The companies
which agreed to share their operational data
reported monthly churn rates of 5-7%, while, as
Maxim Krasnykh, Director for Russia and CIS at
Intel Capital, told us, 30% per year is considered a
normal churn for foreign companies. Maxim also
points out that Russian cloud companies’ ARPU is
3-5 times as low as that of their US peers. However,
acquisition cost is also much lower in Russia: it is
made up for after several months of paid usage
compared to 6-18 months in the US.
We also call attention to the cloud M&A activity of
1C, one of the leading companies on the Russian
software market, which acquired 51% of the capital
of MoySklad for $1.2m in 2011 and 51% of
Megaplan for $7.5m in 2012, thus taking control of 2
out of the 3 emerging market leaders.
Key takeouts
1. There is still plenty of room on the market and low
entry barriers improve the chances of success for
new projects. High market growth rates, low
competition levels and low cloud penetration rates
mean that new projects can achieve fast growth of
revenue and customer base.
2. As the market grows, local cloud providers are
likely to face stiff competition from foreign cloud
software developers, which can afford to spend
more on marketing and adopt aggressive pricing
policies to win market share. Low customer loyalty
aggravates this risk.
3. The marketing costs that are needed in order to
achieve a “critical mass” of customers will rise as
cloud CRM/ERP/SCM penetration rates grow.
4. New opportunities for cloud project exits are
likely to arise as leading Russian IT companies
such as 1C and Diasoft become increasingly
interested in SaaS solutions.

Megaplan offers cloud solutions for customer
relations, sales, staff collaboration and accounting.
Megaplan won Russia’s Soft-2009 Most Promising
Startup of the Year Award.
Monetization
Freemium. A free trial version is offered for 30
days. Monthly subscription is R250-544 per user
per month, depending on functionality. The solution
with the narrowest functionality, “Collaboration”,
includes:
 Task and project management
 Corporate IM and email
 Staff collaboration
 CRM
The “Sales” solution (from R370 per user per
month) includes financial management and an
improved CRM system in addition to the above.
The more expensive “Business” solution allows the
service to be scaled across several offices
domestically and overseas.
The service was launched commercially in 2008.
Team
Mikhail Smolyanov, co-founder, CEO
Graduated from the Faculty of Mechanics and
Mathematics at Moscow State University in 2004.
From 2005 to 2006, Mikhail worked as managing
director at Eurovision LLC. Since 2010, he has
been the development director at StartupIndex.
Mikhail Ukolov, co-founder, managing partner
Graduated from Moscow State University of
Economics, Statistics and Informatics with a major
in management in 2004 and completed a PhD there
in 2007. From 2001 till 2004, he ran Virtual Art
Group studio. Since 2004, he has been a managing
partner at Utinet.ru.
Competition
Megaplan is the leading provider of cloud
CRM/ERP/SCM solutions in Russia. According to
various expert estimates, its share of the Russian
market is between 16% and 25%.
Megaplan management estimate the yearly churn at
40%, or 3.33% a month.
The customer lifetime value has increased from
R10,000 ($400) in 2008 to R40,000 ($1250).
Conversion rate 5-15%
Monthly churn 3.3%
ARPU R1350 ($41)
Customer acquisition cost Up to R13,500 ($410)
LTV R40,000 ($1250).
Sources: Vedomosti, SPARK, Rusbase, RMG estimates
Sources: Company data, RMG estimates
Rusbase reports that Megaplan received
financing of R1m ($31,500) in 2009. According to
SPARK, IQ One owned 23.11% of Megaplan’s
capital as of December 30, 2009, implying overall
company value of $4.3m.
On March 29, 2012, 1C, Russia’s leading
software developer, announced the acquisition of
a 51% share of Megaplan for about $7.5m,
valuing the company at $14-16m.
24
Operational records
2009
2012
Sources: Rusbase, SPARK, RMG estimates
4.3
Megaplan valuation in M&A deals, $ million
14-16

2100
4000
6000
2011 2012 2013E
Revenues, $ thousand
The company’s 12-month revenue as of the end of
June 2013 was $5m. Megaplan has some 10,000
clients. We estimate 2012 revenue at $4m.
According to Mikhail Smolyanov, revenue grew by
70-90% y-o-y in 2012.
Future plans
The company plans further expansion in the
Russian market. It does not expect to enter foreign
markets in the foreseeable future.
Project strengths
 High brand awareness helps cut marketing
costs, attracts larger clients and provides a
steady inflow of customers
 Rich functionality within a single solution helps to
meet the needs of various clients
 The team is experienced in project management
and capital raising
Project weaknesses/risk
 Low customer loyalty: a high churn affects
customer acquisition costs. Also, the bulk of
customers are SMEs and self-employed
individuals, who are inherently exposed to
substantial financial risks.*
25
* These risks are common to most cloud providers

MoySklad (“MyWarehouse”) is a cloud solution for
sales and inventory management. Its functionality
also helps to manage purchases, customer
relations, orders and financial transactions. In 2013,
MoySklad launched “Accounting Online”, which is a
1C-based online accounting product.
Customer categories
 Online stores
The service enables processing of orders received
by various e-stores within a single framework,
loading of product data in the Yandex.Market format
(.YML), management of courier delivery, including
order allocation, route and order list printing, and
courier/mail service accounts management.
 Wholesale dealers
The solution makes it possible to bring together
several entities, branches, warehouses and/or sales
desks within a single framework without incurring
further infrastructure costs.
 Physical retailers
MoySklad provides a full-scale salesperson’s
workplace with functionality ranging from sales
registration and refund management to barcode
scanning and shift closing. The service is available
both online and offline. Integration with a fiscal data
recorder is also possible.
Monetization
Freemium. A fully functional trial version is offered
free of charge for 14 days. Subscription fees range
from R240 ($7.5) to R6400 ($200) per month.
Subscription to Accounting Online costs from R870
($27) to R2060 ($64) per month.
Team
Askar Rakhimberdiev, co-founder, CEO. Has a
more-than-10-year experience in software
development. Askar was previously responsible for
SaaS development at Aspect Enterprise Solutions
and managed projects at Auriga, one of Russia’s
leading IT outsourcing companies.
Oleg Alexeyev is responsible for MoySklad’s
technical development. Before the start of
MoySklad, Oleg was a developer of distributed ERP
systems.
Dmitry Kabatov, co-founder, development director
Has more than 10 years IT experience. Dmitry was
in charge of the Moscow office of Exact Software,
an ERP vendor, for 5 years.
Competition
MoySklad is a leader in Russian cloud
CRM/ERP/SCM solutions for SMEs. According to
expert estimates, the company had 6-10% of the
market in 2012.
MoySklad’s direct rivals in cloud solutions for sales
and inventory management are BigBird and Karkas.
However, most new customers are using MoySklad
as their first business process automation system.
As the market is not saturated, MoySklad does not
have to persuade customers to switch from a rival
solution. Most customers who buy MoySklad
previously used MS Excel for the same purposes.
According to Askar Rakhimberdiev, 1C:Sales and
Warehouse, a cloud solution offered by 1C, targets
larger clients, so it is not a direct rival for MoySklad.
Capital invested
According to our information, Ambient Sound
Investments, an Estonia-based investment holding,
acquired about 20% of the company for over
$100,000 in 2008, valuing the whole company at
about $500,000 at the time.
26

25000
64000
1500
3700
0
1000
2000
3000
4000
0
20000
40000
60000
80000
2011 2012
Revenue and number of customers
Revenue, R thousand Number of customers
In 2011, 1C bought out ASI’s share and a part of
other investors’ shares in MoySklad for $1.2m
(Rusbase estimates). According to SPARK, 1C
owns 51% of MoySklad’s capital as of August
2013, implying $2.35m total valuation. So the 1C
deal valued MoySklad 3.9 times more highly than
the ASI deal.
MoySklad launched its service in February 2008
and 100,000 users had registered on the
company’s website as of August 2013. Askar
Rakhimberdiev admits that customer loyalty is not
high, as shown by a churn rate of 5.5% per month.
The customer base grew by 140% y-o-y in 2012
and revenues increased by 153%.
Future plans
Management says that MoySklad has no plans to
expand beyond the domestic market. The company
expects its revenues and customer base to grow by
70-90% per year over the next few years.
Project strengths
 Leading market position. Brand awareness
helps cut marketing costs and attract larger
clients
 Successful history of venture capital raising
 Strong development team
 Broad functionality of the solution
Project weaknesses/risks
 Low customer loyalty. High churn drives up
customer acquisition costs, and most customers
are SMEs and sole proprietorships, which are
often short of cash*
 Low free-to-paid conversion (4%) suggests that
potential clients are insufficiently aware of the
advantages, which the product offers*
Conversion rate 4%
Monthly churn 5.5%
ARPU R1450 ($45)
Customer acquisition cost Up to R8700
($270)
LTV R26,000
($810)
*These risks are common to most cloud providers
27
2008
2011
Sources: Rusbase, SPARK, RMG estimates
600
MoySklad valuation in M&A deals, $ thousand
2350
Operational and financial records

125 500
900
0
500
1000
2011 2012 2013E
Revenue, $ thousand
amoCRM is a cloud CRM solution with functionality
for creation or transfer of a customer database, task
management, collection and analysis of customer
and employee statistics, as well as bulk SMS and
email circulation.
The service was founded and is owned by Qsoft, a
company with offices in Moscow and the US.
amoCRM was launched in April 2010. According to
Mikhail Tokovinin, the co-owner of Qsoft, the
company has never raised external financing.
Monetization
Freemium. A free version is available with a
restriction on the number of users. Monthly
subscription fees range from R600 ($19) to R3000
($94) depending on the number of users, size of the
customer database and number of transactions.
Team
According to SPARK data, Qsoft was owned by
Mikhail Tokovinin and Denis Mitrofanov as of June
20, 2013. Mikhail declined to share any information
regarding the amoCRM team.
Competition
According to experts and company management,
amoCRM is the most popular Russian cloud CRM
system. We estimate amoCRM’s share of the
CRM/ERP/SCM market at 2-3%. The company’s
direct rivals include domestic Bitrix24, Asoft and
Terrasoft solutions as well as foreign Salesforcem
Zoho and SugarCRM systems.
Mikhail Tokovinin believes that the level of
competition is currently very low, and that the cloud
CRM market may grow exponentially (his is the
most optimistic estimate, which we encountered).
Most of the company’s customers are medium-sized
enterprises, but the product is also used by small
and large businesses.
We estimate 1000 customers as of late 2012 and
2012 revenue at $400-600,000. According to
management, revenues grew by 400% in 2012,
implying that the company earned $100-150,000
revenue in 2011. Based on estimated 1500
customers as of mid-2013, we forecast 2013
revenue between $800,000 and $1m.
The company has rather high churn, but it has
declined since the launch year, when up to 10% of
customers quit the service monthly. The company
does not provide data about customer acquisition
costs and free-to-paid conversion rates.
Monthly churn 6-7%
ARPU R1000-1500 ($31-47)
LTV
R15-25,000 ($470-
780)
Sources: company data, RMG estimates
28
Future plans
Management priorities are integration with other
complementing SaaS solutions, such as cloud
accounting and collaboration systems.
Project strengths
Support from Qsoft, one of the leading Russian web
integrators with rich experience in SaaS: Qsoft
launched the qTrack, amoForms and Shoptus
products.
 Narrow functionality
We cannot evaluate the team due to insufficient
information.

200
1 000
2 800
2010 2011 2013E
Revenue, $ thousand
Moe Delo (“My Business”) is an online accounting
solution with some CRM functionality.*
The project was launched in 2009 and has been
selling since September 2010. In 2010, the
company won the Runet Economics and Business
Award and was a prize winner in the Google and
Forbes Business Project Award.
Monetization
Freemium. A short free trial period is offered.
Subscription fees range from R540 ($17) to R5069
($158) per month depending on functionality.
Team
Maxim Yaremko, co-founder, CEO. In 2006,
Maxim founded Savadi, a software development
company, which he ran until 2010.
Sergei Panov, co-founder, chairman of the board
of directors. Since 2001, Sergei has headed
several publishing houses focused on financial
media.
Competition
Moe Delo is one of Russia’s leading cloud
accounting solutions. Its major rivals include
1CFresh, 1C’s online accounting system, SKB
Kontur’s cloud solution, and Nebo.
In an interview with the leading Russian business
newspaper, Vedomosti, Sergei Panov estimated
the company’s customer base at 180,000 users as
of late 2011. In 2011, the customer base grew by
700%, and revenues rose by 400%, according to
Panov. Forbes estimates Moe Delo’s revenues in
2011 at $1m. Based on the rate of customer base
growth, we forecast 2013 revenue at $2.8m.
Investments
In 2012, Klever Internet Investments Ltd invested
$4m in Moe Delo. Based on 2011 revenue of $1m
as estimated by Forbes and P/S of 7.0-8.0x, Klever
could have acquired around 50% of the company,
implying $8m company valuation.
Project strengths
 High brand awareness
 Large customer base facilitates non-accounting
service sales
 Market saturation may lead to a slowdown in
growth rates
22 500
180 000
500 000
Number of customers
01.01.2011 31.12.2011 31.03.2013
* Although the product is positioned as an online accounting
solution, we have included it in this report as we believe that its
CRM functionality has much market potential.
29

Miiix helps online stores to obtain information on
their suppliers’ warehouse reserves and prices.
The service, launched in August 2012, currently
focuses on stores retailing vehicle tires and wheel
disks. In 2013, the company opened an ‘order
board’ that delivers purchase orders to suppliers,
receiving a commission from the supplier equal to
50% of the difference between the order price and
the supplier’s minimum price for the item.
Monetization
Freemium. The free version only includes a search
in the inventory database. Over 60% of revenues
are generated from commissions on deals through
the order board, while 35% are subscription fees;
and 5% are one-off payments for other services.
Team
Sergei Ryabov, co-founder, CEO
An Internet entrepreneur with more than 10 years
experience. Sergei had a stake in and managed
the shopping clubs, funppc.com and
elitistclub.com. In 2006, he co-founded a domain
name registration firm, ruler-domains.com. A year
later, Sergei sold elitistclub.com to a partner and
focused on the registration firm, which was sold to
a larger rival in 2010. Since 2008, he has launched
several e-stores and in 2009, he was part of the
team, which launched the recommendations
startup, deeep.me. The team transformed into
aller-design.ru, a web studio, which was then
bought out by a co-founder. In total, Sergei has
worked on 10 projects.
Dmitry Bereznitsky, co-founder, CTO
Dmitry started his Internet entrepreneurship career
in 2006, launching affiliate e-stores for Amazon. He
is the founder of Mosquito, an automated store
promotion service and was one of the co-founders
of ruler-domains.com. Later, Dmitry was co-
founder and CTO in deeep.me, aller-design.ru,
prestigewheels.ru and sportmanya.ru.
Competition
Potential rivals to Miix (with similar functionality) are
MarketMixer.net and Agora B2B (the latter is
currently only at the test stage – a beta version has
been launched). Analogues on developed markets
are tyre24.de, Order Motion and Merchantry.
Investments
In November 2012, Miiix sold a 15% stake to RSV
Venture Partners for $20,000, implying total
company valuation of $133.000.
In 2013, Miiix won the IT Startup Eurasia 2013
Award and received a $60,000 grant from Microsoft.
ARPU at the end of June 2013 was around $300.
Monthly revenue figures show distinct seasonality.
0
50
100
150
200
08/12
09/12
10/12
11/12
12/12
01/13
02/13
03/13
04/13
05/13
06/13
Miiix monthly revenues, R thousand
Source: company data
30

Growth in the number of online stores operating in
Russia will be an obvious driver for growth of Miiix
business.
Miiix expects R2m ($60,600) revenues in 2013.
Project strengths
 A team with strong Internet business expertise
 High growth potential, provided that the business
model is applied to more eCommerce segments
and also to offline retail
Project weaknesses
 Seasonality
 Narrow focus: entering new segments may
require substantial development and marketing
costs
144 new users registered on the Miiix website
between August 2012 and June 2013, and the
average share of paying users was 24%.
The company was unable to provide objective data
on customer acquisition costs and average
revenue per customer from registration to the
present (or until the customer quits).
Future plans
The founders currently see two priorities for
company development:
1. Introducing new services to increase ARPU to
$500. As of August 2013, additional services only
account for 5% of revenues.
2. Entering new segments. According to Sergei
Ryabov, Miiix is planning to launch operations in
the sports equipment segment early in September.
New segments could accelerate customer base
and revenue growth. DataInsight estimates that the
car parts segment, to which Miiix is currently
limited, accounted for 10% of all online sales of
physical goods in Russia in 2012.
7500 10000
16000
25000
32500
39000
2008 2009 2010 2011 2012 2013E
Online stores on the Russian Internet
44%
13%
10%
7%
5%
4%
3%
3%
11%
Online physical goods sales structure
in Russia, 2012
Electronics and appliances
Clothing and footwear
Auto parts
Home and furniture
Goods for children
Cosmetics and perfumes
Books and CDs
Foodstuffs
Other
25
36
46
73
88
100
109 117
127 133
144
3 10 14
20 22 23 26 30 34 34 35
0
40
80
120
160
08/12
09/12
10/12
11/12
12/12
01/13
02/13
03/13
04/13
05/13
06/13
Cumulative new users
Number of registrations on the site
Number of customers making first-time payments
Source: company data
Source: Data Insight
Source: InSales
31

BigBird is a cloud system for management of sales
and inventory with functionality covering:
 Sales, purchases and inventory management
 Management of several current accounts and
cash operations
 Create workflow and accounting databases
 Document distribution, printing and emailing
 Generate management accounts for analysis of
business results
BigBird is a product of Eteron, a Russian software
development company.
Monetization
Freemium. A free version with restricted functionality
is available. The product currently has a single tariff
of R590 ($18) per month (if prepaid for a year) or
R990 ($31) per month (if prepaid for one month).
There is also a free version of the product which will
be monetized by showing ads.
According to the founders, the project is currently at
the stage of creating a customer base. Work on
monetization is not yet fully underway, and numbers
of paying customers are low.
Team
Oleg Sidorenkov, co-founder, development director
and co-founder of Eteron. In 2004, Oleg set up a
franchisee of 1C that deployed, customized and
serviced 1C’s managerial accounting software for
SMEs. In 2006, he founded Formz.ru, an online
form-filling solution.
Igor Sidorenkov, project consultant. He previously
worked as a programmer for a US-based software
developer, Pricedrive. In 2001, Igor was Vice
President for system engineering and Head of IT at
CarsArrive Network, a startup later sold to Kar
Auction Services and ADESA. Igor is currently
working as an independent consultant for several IT
projects.
Competition
The product is designed for small enterprises and
self-employed individuals. Direct rivals include
MoySklad and Karkas.
BigBird has a number of distinctive features
compared to rivals:
 System architecture
The kernel of the system is separated from the web
interface and interacts with the latter by means of
standard protocols, thus enabling use of alternative
interfaces and leaving space for integration with
other applications
 Rich interface
The web application’s interface is similar to that of
desktop applications and thus is familiar to users.
Libraries used to create the interface are developed
by a major German hosting provider, which makes
the interface more user-friendly and facilitates the
development of a mobile version of the solution.
Investments
In 2011, Eteron, the owner of rights to Formz.ru and
BigBird, raised angel investments. The deal value
and the share acquired were not disclosed.

Future plans
According to Oleg and Igor, development priorities
include integration with other systems, adding CRM
functionality, creating a version for mobile devices,
and additional services for organizations such as
registration of LLCs and obtaining incorporation
certificates.
The founders do not rule out entering foreign
markets but do not see it as a major priority.
Project strengths
 Reduction of customer acquisition costs and
growth of the customer base can be achieved by
cooperation with Formz.ru (a free site providing
all types of official templates for business use),
which has 140,000 registered users, more than
600,000 visits per month and has provided
50,000 referrals to BigBird in 2013)
 The team has rich experience in automation for
SMEs and fundraising
 Narrow functionality
33

Conclusion
Venture capital market in 2Q2013
 The amount of venture capital invested in Russia in 2Q2013 fell by 41.3% q-o-q and by 47.7% y-o-
y. The number of VC deals closed fell to 53, compared with 75 in 1Q and 87 in 2Q2012.
 We have noticed a significant decline of VC investment in seed/startup companies by private
funds. Private funds provided only 13.1% of all venture capital invested in seed-stage deals in
2Q2013 compared with 34% over 4 quarters of 2012 and 44.7% in 4Q2012, and the trend was the
same for startups.
 IT continued to dominate the venture capital market in 2Q2013, attracting 87% of all venture
capital invested in Russia over the period.
Market situation and outlook
 Russia’s VC market remains non-transparent. Reliable information on deal values and shares of
capital acquired is difficult to obtain and venture companies are often unwilling to disclose their
financials and operational records. Experts and business leaders we have interviewed are fully
aware that an increase in transparency would benefit both investors and entrepreneurs. We are
hopeful for a more open market in the future.
 We note growing interest from foreign corporate funds in the Russian venture capital market. VC
funds founded by the likes of SAP, IBM, 3M are considering investment in Russia.
 More large American and European VC funds such as Accel Partners or Bessemer Venture
Partners, which have not previously been interested in Russia, are now becoming active on the
Russia VC market.
 Private VC funds are being set up by founders of Russian projects who have successfully cashed
out during IPOs (such as Mail.ru and QIWI) or M&A deals.
 The decline in capital invested by private funds in seed/startup companies is likely to continue.
Russian and foreign investors are unwilling to assume the large risks associated with these
projects. We believe that a major part of seed financing will come from state-backed funds.
The future of cloud technologies
 According to experts and market leaders, Russia’s cloud tech market will grow faster than IT as a
whole, with CAGR of 44% up to 2016.
 According to Parallels, almost 50% of SMEs not currently using cloud solutions are going to adopt
cloud technologies within 3 years.
 Both Russian and foreign investors are interested in Russian cloud startups. We are confident that
Russia’s cloud tech market has substantial investment potential.

Acknowledgements
We would like to thank the experts, creators of M&A databases and venture entrepreneurs, who have
contributed to our Report:
Andrei Dovgan
Head of General CRM
Terrasoft
Oleg Fateev
Director of Cloud Computing
Business Development
IBS Holding
Vladimir Gabriel
Head of Sales
Delovaya sreda
Dmitry Galperin
Director of Investments
Runa Capital
Victoria Gracheva
PR&IR Director
iTech Capital
Alexander Kotov
Co-founder, CEO
Venture DataBase
Maxim Krasnykh
Director for Russia/CIS
Intel Capital
Demid Kuznetsov
Financial Director
iTech Capital
Evgeny Nikolaev
CEO
IBS DataFort
Mikhail Oreshin
Co-founder
Russian Cloud Computing
Professional Association
Victor Osyka
Partner
Almaz Capital
Marusya Podlesnova
Co-founder, CEO
Rusbase
Askar Rakhimberdiev
Co-founder, CEO
MoySklad
Sergei Ryabov
Co-founder, CEO
Miiix
Oleg Sidorenkov
Co-founder, Head of Development
BigBird
Igor Sidorenkov
Project consultant
BigBird
Mikhail Smolyanov
Co-founder, CEO
Megaplan
Alexei Solovyov
Managing Director
Prostor Capital
Mikhail Tokovinin
Owner
Qsoft

Contact information
We are greatly interested in the opinion of our readers, so if you are an investor, a venture
entrepreneur or otherwise interested in Russia’s venture capital market, we will be delighted to
receive any feedback from you that will help us improve our reports.
Please send your feedback to vc@rmg.ru
Authors:
Arseniy Dabbakh
Director, Corporate Finance
arseniy.dabbakh@rmg.ru
Boris Orlovetsky
Analyst
boris.orlovetsky@rmg.ru
Sergei Pigarev
Analyst
sergei.pigarev@rmg.ru
Andrey Tretelnikov, CFA
Analyst
andrey.tretelnikov@rmg.ru

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Copyright © Rye, Man & Gor Securities, 2013
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RMG Russian Venture Capital Market Overview 2Q2013

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